Office Depot International (UK) Ltd v UBS Asset Management (UK) Ltd & Ors

Declaratory relief is discretionary and requires a real, justiciable dispute. The declaration sought must identify the parties’ rights or obligations with sufficient precision and serve a useful purpose. A commercial tenant’s repairing covenant ordinarily requires the tenant to achieve the contractual standard of repair, rather than to carry out court-prescribed works. Where the landlord has not required particular works and the tenant advances no positive case, the court should not conduct an inquisitorial exercise to select or supervise remedial works. A contingent claim under collateral warranties may proceed only if the claimant pleads a positive case identifying the remedial works and loss relied on.

The claimant tenant occupied a warehouse under a lease containing a repairing covenant. Water ingress affected the roof, and earlier claims concerning alleged design and construction defects had been settled by the landlord and contractors. The tenant sought declarations identifying the works, if any, required to comply with its repairing covenant, together with declarations and financial relief against the contractor and subcontractor under collateral warranties.

The defendants applied to strike out the claims and sought summary judgment. The claimant applied to amend its particulars of claim. The central issues were whether the proposed declaratory claim against the current landlord disclosed a justiciable dispute and whether the contingent warranty claims were adequately pleaded.

1. Applications concerning pleadings. Under CPR 17.3, the court has a general discretion to permit amendment, exercised in accordance with the overriding objective. An amendment with no real prospect of success should be refused. The strike-out and summary-judgment principles under CPR 3.4(2) and CPR 24.2 require a realistic prospect of success, avoid a mini-trial, and permit the court to decide a short point of law or construction where the necessary material is available.
2. Declaratory relief. The court has a wide but discretionary jurisdiction under CPR 40.20. It requires a real dispute concerning the parties’ legal rights and a declaration formulated with precision. The court must also consider justice to each party, whether the declaration would serve a useful purpose and any other special reasons.
3. The tenant’s repairing covenant imposed a continuing obligation to maintain the premises to the contractual standard. The choice of works was for the tenant. The proposed claim against the current landlord disclosed no dispute requiring determination: the landlord did not seek particular remedial works, and the tenant advanced no positive case as to which scheme was required. The court should not undertake an inquisitorial comparison of alternatives or transfer the contractual risk of performance from tenant to landlord. The claim therefore had no real prospect of success.
4. The claim against the former landlord was struck out because it was no longer the landlord. The claims against the contractor and subcontractor were flawed insofar as they depended on the court first determining the tenant’s repairing obligations. However, the pleaded defects and alleged warranty breaches could support properly formulated claims. The claimant was therefore given a further opportunity to plead positively the remedial works and loss relied on, having regard to the risk that limitation would otherwise defeat the claims.
5. The replies were admitted despite being late because the delay was insubstantial and caused no prejudice. The claim against the first and fourth defendants was struck out. The amendment application concerning the second and third defendants was adjourned, with directions for a further draft pleading and a case management conference.